Processing Capacity is Outpacing Production

An article by Fran Howard on Dairy Herd Management

Milk powder inventories were tight at the end of May, and while that partially helps explain why CME spot nonfat dry milk (NDM) powder prices have soared this year, additional increases in milk production could soon shift the supply-and-demand picture for U.S. milk powders.

“Increases in milk production could result in more skim and nonfat dry milk powder output and, eventually, lower prices,” said Sarina Sharp, analyst with the Daily Dairy Report. “While cheese plants have been taking a greater share of the milk supply in USDA’s Central region, dryers have been running hard in the West.”

Milk powder production in the first quarter of this year was significantly lower than it was in the first three months of each year between 2017 and 2023, according to USDA data. However, first-quarter nonfat dry milk (NDM) and skim milk powder production in the first quarter of the year was close to 2024 volumes and 6.5% greater than first-quarter 2025 output.

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